The German Anti-Discrimination Act (Allgemeines Gleichbehandlungsgesetz  “AGG”) became effective on 17 August 2006; it was adopted to implement four EU directives regarding anti-discrimination and has further increased the protection of employees against potential discrimination.

The purpose of the AGG is to ensure equal treatment for all individuals in the workplace. The AGG fully protects employees, trainees, temp workers as well as job applicants and prohibits direct and indirect discrimination on the grounds of race, ethnicity, gender, religion or belief, disability, age and sexual orientation. Managing directors, who are not treated as employees under German employment law, are protected only regarding access to employment and promotions. Consultants, freelancers and other independent contractors are not covered at all.

The AGG covers all employee-related measures taken by the employer, from the posting of a job vacancy to rules governing an existing employment relationship. Terms and conditions of employment are also covered by the AGG, as well as the termination of employment contracts and the terms of social compensation plans in case of mass redundancies or other restructuring measures.

Pursuant to the AGG, a job applicant or an employee who has been discriminated against can claim damages within two months of becoming aware of such discrimination. Job applicants rejected on discriminatory grounds who would nonetheless have been rejected anyway, are entitled to a maximum of three months’ payment as damages. Employees are entitled to uncapped damages for financial loss if the employer is at fault. Damages may also include a claim for non-pecuniary loss, such as pain and suffering.

In addition, discriminatory agreements entered into with an employer or discriminatory sanctions imposed by an employer, such as termination on discriminatory grounds, are null and void. According to the AGG, the employer is also obliged to protect employees from discrimination and discriminatory harassment by fellow employees or third parties such as customers. The AGG makes it easier for an employee or a job applicant to demonstrate that discrimination has taken place, as the employee merely has to provide prima facie evidence suggesting that discrimination has taken place. In such an event, the employer bears the burden of proof to show that no discrimination has occurred. Therefore, employers are well-advised to increase their efforts to document all employment-related measures in writing for evidence purposes.

Different treatment of employees on the grounds set out in the AGG is permitted as long as the employer can demonstrate objective, legitimate reasons justifying the discriminatory treatment. In particular, genuine business requirements, e.g., for an actress rather than an actor to play Juliet in Romeo and Juliet, will be covered. Reliable tests to distinguish between justifiable and unjustifiable discrimination will develop only over time.

The AGG has provoked considerable expenses, time and efforts of German companies to provide appropriate training to their employees in order to avoid potential discrimination and to review and reorganize employment contracts, standardized questionnaires and job interview procedures. However, the expected massive lawsuits for damages based on unlawful discrimination have luckily not materialized to date.